Letter to the Advisory Council on Economic Growth

Mr. Dominic Barton
Global Managing Director, McKinsey & Company
Chair, Advisory Council on Economic Growth
Ministry of Finance

Dear Mr. Barton,

I am delighted to see the work of the Advisory Council taking shape.

As the Council’s work ramps up over the summer, I would like to offer Universities Canada as a key resource to inform your deliberations on how best to build an innovative, inclusive and prosperous Canada. Universities Canada represents all 97 universities in the country and serves as the voice of Canada’s universities.

We are also actively engaged in the Innovation Agenda and the fundamental science review recently launched by Minister Bains and Minister Duncan. All three policy reviews hold great potential for forging a new path forward for Canada.

There are three areas in which we are developing new policy ideas that I want to share as the Council advances its work: talent mobilization, research and innovation, and labour market information.

Talent Mobilization

To achieve sustained and inclusive economic growth, Canada must advance a talent agenda that strategically leverages our greatest assets: people and ideas.

We need to nurture our next generation of entrepreneurs and innovators, ensuring Canada has an educated workforce with the skills needed to succeed in and contribute to the global economy. That means giving all university students access to experiential learning and global study, and boosting interdisciplinarity within university programs.

For many years we have been advocating increased opportunity for work integrated learning. We are delighted that the newly created Business and Higher Education Roundtable recently called for access to work-integrated learning opportunities for 100 percent of Canadian postsecondary students. All partners – government, universities and employers – will need to do more to meet this ambitious goal. While undergraduate co-op placements have doubled in the last 10 years, student demand across disciplines continues to outstrip supply. We recommend new federal measures – such as vouchers and/or tax credits – to incentivize more employers, especially SMEs and not-for-profits, to create these career-boosting opportunities.  This recommendation is also supported by the Canadian Chamber of Commerce.

Learning across borders is also part of a 21st century education. Young Canadians need to understand other countries and other cultures – open minds mean open borders for trade, immigration and ideas, all ingredients to becoming a global innovation nation. This takes an even greater urgency following last month’s Brexit vote.

Only three percent of Canadian university students go abroad for study in any given year, despite 97 percent of universities offering international experiences. There are a range of barriers including cost and a weak “culture of mobility.”

Increasing the international mobility of university students is a crucial step in developing our next generation of leaders and sharpening Canada’s competitive edge.  Last week, we were delighted to help facilitate a town hall with Prime Minister Trudeau, Mexican President Enrique Peña Nieto and university students to discuss the value of international study experiences.

“Young people understand that we’re in a globalized world right now, and the more we can challenge ourselves to understand different realities, different perspectives, different cultures, the more we discover about ourselves and our place in an increasingly complex world,” said Prime Minister Trudeau during that event. “The more we can engage in the kinds of dynamic learning that solid exchanges between countries [foster]…the better it’ll be for young people and for our countries as well.”

At the same time, we need to position Canada, through smart immigration policies and best-in-class processes, as a global magnet for top international students and research talent. We are pleased to see Minister McCallum moving in this direction, and a bold policy objective in this regard would be very welcome.

Canada must also do more to invest in the knowledge, skills and talent of our Indigenous youth. Only 11 percent of Indigenous people aged 25 to 34 in Canada have a university degree, compared to 33 percent of non-Indigenous Canadians in the same age group.  We need to do better as a country to support young Indigenous people in reaching their full potential.

Canada’s universities are committed to doing their part to close the education attainment gap, and are ramping up their efforts to build welcoming and respectful learning environments for Indigenous students. I have enclosed our new publication which highlights the substantial progress over the last three years.

Greater federal financial aid to improve access to higher education and new support for university programs and services that boost retention and graduation rates are fundamental to unlocking the untapped potential of Indigenous youth.

Research and innovation

As noted in the September 2015 report by Don Drummond for the Canadian Centre for Living Standards, talent mobilization, discovery and applied research, innovation and economic growth are intimately connected.

In this country, universities are engines of discovery and innovation. Starting in 1997, Canada has made remarkable strides in expanding access to postsecondary education, creating a new generation of world-class researchers and providing state-of-the-art research facilities. In many areas Canada is globally competitive and those early investments are now bearing fruit. University scientists performed over $13 billion of research and development in 2014 – 40 percent of the national total and much higher than the OECD average. And every year, university researchers conduct nearly $1 billion in research for businesses, helping build their competitive advantage.

But sadly, that pace slowed considerably over the past decade and we are falling behind other nations’ investments in research and development. Between 2006 and 2014, higher education expenditures on R&D in Canada fell from third to seventh among OECD nations. There is a great risk of complacency as others drive forward further and faster.  Canadian business investment in R&D fell even more precipitously.

Raising our game means re-investing in higher education research – and research infrastructure – to bring us back to globally competitive levels. This would enable the Canada Foundation for Innovation to provide facilities and equipment to support advanced research across disciplinary and industrial sectors. It would invest in talent and discovery through expanded support for NSERC, SSHRC and CIHR.

It also means scaling up mechanisms that connect people and ideas and drive innovation: university incubators, accelerators, venture labs and zones. Universities across the country are developing initiatives that create “collisions” between industry partners (including SMEs) and talented researchers and students to find solutions for business problems. To further drive innovation and local and regional economic development, Canada should invest in scaling up and networking successful models as well as provide incentives to SMEs to encourage them to work with universities and pull research expertise and the generation of new ideas into the marketplace. At the same time, Canada must advance an industrial “clusters strategy” that positions universities as anchor institutions and that is open and inclusive in terms of criteria for decision-making.

Labour Market Information

Access to timely, reliable and comprehensive labour market information is critical for students, parents and educators to make informed decisions about study and career outcomes and options. There is an opportunity for strategic investment in sustained data collection and analysis and support for enhanced coordination through the new Labour Market Information Council established by the Forum of Labour Market Ministers.

We also recommend support for a national approach to the new research being conducted by the Economic Policy Research Institute at the University of Ottawa that links tax data to graduates’ earning and employment outcomes.  Findings from the 14 participating postsecondary institutions will be launched next week, promising a new source of valuable data to inform skills and labour market policy-making.

In closing, Universities Canada looks forward to working with you and Council members to advance Canada’s long-term and inclusive economic growth through a bold agenda for higher education, research and innovation.

We would welcome an opportunity to engage in policy dialogue with the Council, through a meeting and/or teleconferences with the chairs of the working groups on innovation and talent/labour market and our Board advisory committees on Research and Education.

We would also be happy to help arrange roundtables for the Council held on university campuses. My staff will follow up with the secretariat at the Department of Finance to discuss possible arrangements.


Paul Davidson

President, Universities Canada

Universities Canada